The value of a trading business, be it sole trade, partnership or shares in a private limited company, should qualify for business property relief “BPR”. The relief takes the value of your business or shares in it out of your estate completely for IHT purposes.
However, the relief can be restricted. E.g. looking at shares in a private limited company, only the value of the business attributable to business assets will attract relief. If the company has any excepted assets, those which are not used for business purposes, then some of the value of the shares may remain within your estate for IHT purposes.
Common excepted assets may include surplus cash on deposit not retained for business use, and investment properties held for rental within an otherwise trading business.
BPR is a valuable relief but don’t just assume it applies to your trading business without restriction, it pays to review your posititon on a regular basis for anything that might have a negative impact.
For more information, please contact Lesley Sutton on 01484 550037 or email firstname.lastname@example.org.